ECB's Nowotny: Too early to say we have reached a turning point

European Central Bank Governing Council member Ewald Nowotny said on Friday he was not concerned about inflation remaining well below the bank's target until 2018, adding that the bank was allowing measures introduced earlier this year to take effect.

ECB inflation projections released on Thursday were revised upwards for 2016 to 0.2 percent from 0.1 percent, but inflation projections for 2017 and 2018 remained unchanged at 1.3 percent in 2017 and 1.6 percent in 2018.

"We will have still very low inflation this year but we think that in the next year already we will have quite a substantial pickup in inflation," Nowotny told CNBC in an interview in Vienna. If the bank's forecasts materialize, there will be no need for further stimulus, however, he said.

He cautioned, however, that the bank's forecasts had been made on the assumption there would be no major decline in oil prices. "With inflation, we are all aware that the main mover are the oil prices," he said.

Nowotny, who is governor of the Austrian central bank, added that given the highly political nature of oil price moves, this was the bank's "best guess". He also conceded that the ECB's oil price assumption, with respect to forecasting inflation, was conservative.

The ECB delivered a surprise package of measures to kickstart Europe's economy in March, cutting interest rates and expanding its massive bond-buying program.

These measures now needed time to materialize, and while the bank hadn't yet fully exhausted its arsenal of policy options, Nowotny was confident they would have "substantial effects in the future".

"It is, I think, too early to say that we have now reached a turning point. But there are signs," he said.

"We are aware there are of course also some downsides and risks," he said, warning specifically of the oil price.

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